Category Archives: The state of the nation

Is this why we’re spending money on higher education for our children?

Q: What do you want to be when you grow up?
A: Employed!

How are you going to explain that this isn’t your grandfather’s economy?

If deciding what university or community college or trade school your child is going to attend is starting to keep you up nights, you’ve probably visited more than a few of their websites. You’ve looked at the pictures of smiling faces, viewed the videos and read the inspirational language intended to convince you to spend your money, and, possibly, your child’s future, with the people on whose behalf those websites were created.

By now you’ve noticed that (a) you’ll have to do some digging to find any mention of tuition, fees and expenses because it would be in poor taste to publicize them on the home page; and (b) every one of those institutions is looking for a donation.

There are some who consider it gauche to have the words “money” and “university” in the same sentence. They would argue that higher education isn’t about money: it’s about introducing young minds to new ideas and new ways of looking at the world and themselves. It builds networks that include students who sit next to one another in lecture halls but live half a world away. Then there’s the benefit that comes from learning to fend for oneself away from home. This is the point where laundry and groceries enter into the discussion.

Those people would be right—to a point. But when the last glittering speck of that pixie dust that university websites magically create settles gently to the floor and the cool breeze of reality wafts through the room, the fact of the matter will be that nothing about attending an institution of higher learning is free. Once a child reaches the end of the taxpayer-funded, kindergarten/primary school/high school conveyor belt, decisions have to be made about the need for post-secondary education altogether. (P.S.: Taxpayer dollars pay for that, too.)

Even if his or her degree were paid for in full before the first day of lectures, the newly minted undergraduate or postgraduate is going to have to earn a living, especially if he or she is among the 40 million students south of the border who have US$1.2 trillion in student loans to repay, or the Canadians who owe between C$25 billion and C$50 billion. That money is going to have to come from somewhere. What about the cost of living? Will there be a new home or car to finance? Will there be enough money to pay the rent or buy food?

Finding work to pay for those things is the elephant in the room. Regardless of how many organizations the new graduate may have joined or voyages of self-discovery he or she may have gone on, if the résumé intended to support his or her application for that first full-time job is rejected by applicant tracking software for lack of key words and phrases, we have a problem. If the problem can be traced to a poorly executed résumé, the oversights can be corrected. But if the academic qualifications are wrong and creativity falls short of compensating for it, the only cure may be to spend 4 more years earning an education that will sell, but only after an in-depth reassessment of personal goals and what the economy needs.

As a country, we can’t afford scenarios like that because a mind is a terrible thing to waste (©UNCF). If you read or listen to nothing else today, please click on and ponder Robots Vs. The Middle Class (Bloomberg Businessweek, May 25 – May 31, 2015) and listen to Terry O’Reilly’s The Internet of (Marketing) Things (Under the Influence, CBC Radio One, Saturday, May 30, 2015). You’ll want to pay particular attention to O’Reilly’s thoughts about the Apple Watch.

How different is today’s economy from your grandfather’s economy? Well, did you ever doubt for a moment that your first job would be full-time with benefits? Are you doing now what you were planning to do then? Are you employed full-time? Have you been unemployed as a result of downsizing or outsourcing? Knowing what you know now, what would you do differently?

Would your grandfather recognize a world in which China is the world’s manufacturer, where 50% of working Canadians of all ages are not employed full-time, and where the price of post-secondary education is higher now than at any other time in history? What about a Canada where manufacturing has been decimated while employers continue to complain that they’re hard-pressed to find certain kinds of workers yet most of them refuse to train? What would he say about a Canada where $500 billion is sitting idle while vote getting corporate tax breaks underwritten by your tax dollars and mine go unused?

The North American work force is resolving itself into two camps: the one that recognizes that this isn’t your grandfather’s economy and is adjusting its expectations accordingly, and the one that doesn’t. One refuses to take career and labour market information at face value until they’ve confirmed it independently with multiple sources with their own eyes, not once but several times. The other doesn’t. One studies industries, market trends, the impact of technology and the performance of employers because they recognize that large numbers of dollars are at stake, not only the ones they’ll spend acquiring the necessary education, but the also the ones they risk not earning by failing to do their personal due diligence. The other doesn’t.

The economy is the financial air we breathe. We ignore it at our peril. Since 2001, I’ve met face-to-face with 2130 working people who, five minutes before I walked into the room, lost a job they thought wasn’t at risk. Most of them believed that where the world is going didn’t apply to them. They were mistaken.

F. Neil Morris
President & Founder
Personal Due Diligence
+1 (905) 273 9880

A riddle with a twist

What costs $24,000 or more; takes 4 years to deliver; can’t be insured; has no cash surrender value; can’t be returned or exchanged; comes with no performance commitments and is covered by the two-word guarantee: caveat emptor?

An undergraduate degree.

Such is the mystique surrounding universities that otherwise perfectly rational human beings line up like lemmings to press hard-earned money into the palms of people who work in registrars’ and admissions offices. This in spite of media coverage of the plight of university graduates who’ve watched employers devalue and demean their diplomas and the four years of work that went into earning them by offering unpaid internships, short term employment contracts or permanent part-time engagements. No benefits, no stability, no prospects. The labour market in Canada and elsewhere is awash in undergraduates and post-graduates who are free to sell their services at whatever severely depressed prices the market dictates, or run the risk of earning next to nothing or nothing at all.

Employers are playing the game according to the rules of supply and demand in pursuit of profit and positive return on investment. The question is, by what rules are parents playing that we’ve arrived at this point? How much damage is inadequate decision making going to do to the financial future of our children and, quite possibly, the country, before we accept that we’re in a buyer’s market for certain kinds of education. The university degree is a commodity and it’s in oversupply in certain disciplines. Every new diploma in those disciplines that hits the street and has no takers drives down its own value and the value of diplomas like it.

Parents who choose to sleepwalk through these economic times when it comes to choosing post-secondary education are bringing about precisely the outcome they spent so much money trying to avoid. Absolute trust in the inevitability of work for all bearers of all university diplomas is out of place in 2015.

Management training: Keeping it on the company campus and How to join the 1%are two articles from The Economist that show just how quickly some in the business community adapt to new ideas. And if those ideas don’t pan out, there are always new ones waiting in the wings.

I’m a firm believer in the need for healthy, affordable universities. My children and their spouses are now established undergraduates and post-graduates. Where else are the people we’re going to need to get on with the rest of our life going to come from if not from universities, community colleges and technical schools? I’m not just talking about medical and other professional people. I’m talking about people who’ll come up with better ideas than the ones we have now about climate change, air pollution, land use, R & D, manufacturing, natural resource extraction, inadequate transit and drought in key food-producing regions of the world, just to name a few.

Those temp jobs that always seemed to be there for anyone who needed a little spare cash every now and then have morphed into the new normal for 50% of working people of all ages, yourself included, dear reader. And not only in Canada.

Head-in-the-sand attitudes, not mass hypnosis, are responsible for the outbreak of PEV (precarious employment virus), aided and abetted by vote-buying tax breaks paid for with taxpayer dollars that were supposed to generate work for Canadians but instead have accumulated to the tune of over C$500 billion in dead money according to former Bank of Canada and now Bank of England governor Mark Carney:

“Bank of Canada Governor Mark Carney has taken a rare swing at corporate Canada, accusing companies of sitting on huge piles of “dead money” that should be invested productively or returned to investors. ‘Statistics Canada numbers show Canadian non-financial corporations with a cash hoard of $526-billion at the end of the first quarter of 2012, an increase of 43 per cent since the recession ended in 2009.’”

Universities cater to the demands, not the needs, of the students who make up the bulk of their clientele. What students need is a strategy to deal with employers who won’t offer full-time employment. One way to deal with them is to not plan to work for them. Would you approve a mortgage or car loan for someone who can only find part-time work? Wouldn’t it be ironic if we reverted from being a cashless society to a cash-only society? As PEV continues to spread and economics forces more and more families to consider options other than university, employers will have to raise salaries, train, and revert to the full-time employment model to attract the talent they need. But that won’t happen overnight, if it happens at all.

A review of the literature dating back to the early 2000s will show that many universities are struggling to cope with reduced government funding, declining enrollment and the impact of technology. You might want to read what James Duderstadt, President Emeritus of the University of Michigan, had to say about the subject in the ‘Emory Report dated March 20, 2000.

The era of ‘you pay your money and you take your chances’ is drawing to a close. Forty million Americans owe US$1.2 trillion in student debt. Seven million have already defaulted on those loans. Many of them haven’t or won’t complete their programmes. Still, universities have no incentive to scale back their student intake based on the demands of the economy when they can collect 100% of their ‘fee’ from each graduate they produce regardless of whether that graduate finds work or not. It’s that intake that attracts government funding. Why does the buying public accept that?

According to The Guardian, the Bank of England believes that contract work is here to stay. Parents and their children may not agree with that assessment, but due diligence demands that, at the very least, they take all reasonable steps to assess its implications.

If you have questions, PDD has answers. I invite your inquiries and your comments.

Sincerely,

F. Neil Morris
President & Founder
Personal Due Diligence

+1 (905) 273 9880

A 5-minute survey on hopes, dreams, tuition, precarious employment and post-secondary education

Higher education is the single largest investment most people will make in their lifetime, after a home

— Neil Morris, Founder & CEO, the Personal Due Diligence Project (PDD)

Saturday, April 18, 2015

 

Conventional wisdom and statistics have traditionally maintained that an advanced education is one of the better ways to protect children from an uncertain economic future. In some cases it still is, but in a growing number of what used to be safe cases, it isn’t.

“Don’t trust anyone over 30” defined the ’60s. “Ich bin ein Berliner” defined the Cold War. Some day, a future historian may paraphrase Stephen Leacock and say that we were living in a world “[riding] madly off in all directions” with an iPhone in one hand, an iPad in the other and (as of April 24th) an Apple WATCH on its wrist.

That all 3 three devices originated with a single company is a fascinating story in its own right, and it’s still being written as you read this. The WATCH is the first all-new product to be conceived, developed and released since the passing of Steve Jobs.

Also evolving is the 140-year-old company that was once considered the antithesis of Apple. That evolution has given rise to WATSON, and, among other things, to a 7-year contract with Apple to develop apps for the iPhone. That company is IBM. You owe it to yourself and your children to watch and THINK about this interview with IBM CEO Ginni Rometty from start to finish (15 minutes). Then there are C|NET stories 1and 2 you can find here. The big story is the evolution of technology. The really big story is how it’s contributed to the evolution of the 7.2 billion people who live on this planet.

All of the companies mentioned in these stories accepted that to survive, they had to leave large parts of their past behind. Now comes the question, “How will our thinking have to evolve so that we and our children can survive precarious employment? It’s because of that question that I hope you’ll take 5 minutes to complete PDD’s on-line survey ‘Hopes, dreams and tuition’ by clicking here. And to ask that you pass this link along to anyone you know who plans advanced education for his or her children. All responses are strictly anonymous. The survey tool does not identify respondents.

Thank you for your interest and your participation.

Sincerely,

F. Neil Morris
Founder & President
The Personal Due Diligence Project

+ 1 905 273 9880

 

Back to the Future: some land, a horse and a plow

The twenty IBM sales recruits sporting three-piece, dark blue suits with sincere tie, long-sleeved-button-down-collar white shirt and wingtip shoes (brogues) had just learned that we had left the letters on the nameplates in front of us undisturbed for three days, two days longer than normal. Bob Oliver from L.A. became Bobo Liver. Boys will be boys.

IBM 403

The “big blue machine in the corner”

The morning’s delivery of doughnuts and various and sundry hot and cold beverages from the nearby bakery in Princeton, New Jersey was sitting on the “big blue machine in the corner”, an IBM 80-column-card-based 403. We were about to learn how the company’s compensation plan worked.

After what was left of the day’s doughnuts had been cleared away, our instructor asked each of us what kind of car we were driving. Anything less than a Mercedes-Benz would have to be upgraded. Keeping up our car payments would be the incentive to exceed quota. But he assured us that with time, we’d be earning more than enough to make the Benz affordable.

None of us bought the Benz, but the message stuck. They wanted us to stay, they wanted us to perform and they wanted us to succeed. That was in 1968: what a difference almost 50 years has made.

The 2015 that Robert Zemeckis envisioned in the 1989 sci-fi movie Back to the Future Part II makes no mention of precarious employment nor of the corporate victory over labour. Neither did IBM in the late 1960s because, back then, no one saw it coming. But it’s here now and it’s impacting on developed and developing countries as this is being written. You can read about the consequences to date in the PEPSO report entitled It’s More than Poverty.

As in most crises or gathering crises of this kind, there’s much discussion about research into the problem, but very little about action. People are at risk and are suffering now. We’re especially concerned about whether parents are factoring this new reality into their plans to invest in post-secondary education for their children, or ignoring it.

As parents in our own right, the position of the Personal Due Diligence Project is that parents must be strategic and pre-emptive in how they approach preparing their children to support themselves. We’ve already begun a survey of parental attitudes about higher education and the extent of their understanding of the implications of just-in-time work.

Not every employer subscribes to this madness. There will be no winners as a result of precarious employment. Driving down the buying power of working people will drive down the demand for the goods and services their employers provide. A farmer looking for ways of conserving money in hard times hit on the idea of cutting back on the quantity of oats he fed to the horse that pulled his wagon. On the day he reduced the quantity to zero, the horse died of starvation.

No one involved with the Personal Due Diligence Project is a Luddite. Far from it. But what we do understand is that machines crave nothing, demand nothing and buy nothing.

As for our governments and business leaders, it wouldn’t surprise us if some bright young bureaucrat came up with the idea of granting unemployed and underemployed Canadians title to 10 acres of land, a horse, some oats and a plow.

Neil Morris
Founder & President
The Personal Due Diligence Project

James T. Kirk and the Kobayashi Maru

 

On his third attempt, Captain James T. Kirk of the starship Enterprise passed the Kobayashi Maru holodeck “no-win” training exercise by reprogramming it. He was subsequently commended for original thinking. Whether or not this was Starfleet’s way of saying that reprogramming was an option because it was not expressly forbidden, only the film’s writers Roberto Orci and Alex Kurtzman know for sure.

Fiction or no, that part of Star Trek lore resonates in 2015, especially the part about original thinking. The 6 crew members onboard the International Space Station may be excused if they haven’t had time to contemplate how sub-US$50 crude oil will impact on them and their families. But the rest of the people on planet Earth won’t have that luxury.

For Canadians, the world started to change on July 1, 2014. On that day, the Loonie closed at 94 cents. It started changing a lot faster when the Bank of Canada lowered its interest rate to 0.75% on January 21, 2015. We’ll soon be paying a lot more for our morning orange juice, and a lot of other things, courtesy of a 78.5-cent dollar as of February 1, 2015. The interest rate could fall to 0.5% as early as March. Barclays Bank has downgraded its stock ratings for the Bank of Montreal, Royal Bank and TD Bank, noting that “consumer borrowing, the main profit driver for Canada’s banks, will likely slow even more than previously expected”.

Much of the reason will be stories like Target Canada’s abrupt closing of its 133 retail outlets and the 17,600 Canadians who were let go as a result. That doesn’t include Target’s suppliers. SONY Canada is closing its retail stores. Alberta now faces the prospect of recession. Oil companies are cutting back on capital expenditures and hiring. CIBC will be laying off 500 employees because of slower than expected profit growth.

The Kobayashi Maru scenario left little room for “if it ain’t broke, don’t fix it”. For the moment, Canada looks like an oil-based, one-trick pony. Canadians will have their say about whom they blame and what should be done about it on October 19th—or sooner.

We keep hearing that a lower dollar will be good for Canadian manufacturers and exporters. But in the meantime, we have to play the cards we’ve been dealt. That will call for out-of-the box thinking by Canadians looking to become re-employed and those hoping to land that first job.

What is broken and needs to be fixed is the notion that we can or should rely on governments at any level to do our thinking and planning for us. Most have shown that they can barely think for themselves. We’re going to have to develop our own versions of Kirk’s Kobayashi Maru, because without them, not all choices having to do with postsecondary education will be the right choices. There is nothing on the horizon to suggest that conventional thinking will mean that there will be more than enough good, secure, full-time work to go around.

As Jean-Luc Picard, captain of a later Enterprise, would have put it: “Make it so.”

 

From industrial to post-industrial: What does it all mean?

Graduating from university has traditionally been synonymous with the good life and financial security. In some cases, it still is. But not for graduates with degrees for which there is no demand. Work was supposed to be plentiful, not precarious. Yet here we are. The world has changed and we have to rethink how our children are going to earn a living and what kind of education they’re going to need. We have to talk to them about higher education, about how the cost is rising, and about how it wasn’t supposed to be this way.

Economies and societies evolve from industrial to post-industrial. That’s what’s been happening to us for the last 35 years. Wikipedia defines a post-industrial economy as: “A period of growth within an industrialized economy or nation in which the relative importance of manufacturing [shrinks] and that of services, information, and research grows. Such economies are often marked by:

“The industry aspect of a post-industrial economy is sent into less developed nations which manufacture what is needed at lower costs (see outsourcing). This occurrence is typical of nations that industrialized in the past such as the United States and most Western European countries.”

Akio Morita, the better known of SONY’s two co-founders, recognized the signs that North America’s economy was in transition in the mid-1980s. When he died in 1999, The New York Times published an account of his life that described when the transition began:

“In the 1980’s, when Japan seemed on top of the world, Mr. Morita was among the most vocal of the Japanese executives in criticizing American business and hailing the success of the Japanese model. He said American managers were financial paper shufflers who ‘can see only 10 minutes ahead’ and were not interested in building for the long term. And he said that because American companies were losing interest in manufacturing, the United States was abandoning its status as an industrial power.’ Those factors, he said, and not trade barriers, were the reason for America’s trade deficit with Japan.

“’There are few things in the United States that Japanese want to buy, but there are a lot of things in Japan that Americans want to buy,’” he wrote in 1989. “’This is at the root of the trade imbalance. The problem arises in that American politicians fail to understand this simple fact.’”

We’ve learned, some of us more painfully than others, that Morita was right. As went manufacturing, so went the economy. But manufacturing has been going elsewhere for the last 35 years and most people who have jobs appear not to have noticed. They’re convinced that a return to the good old days is just around the corner and they’re educating their children accordingly.

Even if they were right—and they’re not—graduates have discovered that the jobs “in their chosen field” that were supposed to pay off their student loans aren’t there any more. That’s something they and their parents should have known before they wrote the cheques or negotiated the loans.

Some of those graduates live in the U.S. and owe US$1.2 trillion. Their Canadian cousins owe between C$25 billion and C$50 billion.

Morita’s pronouncements were behind my founding Personal Due Diligence, or PDD. If the implications were going to impact on my two children, they were going to impact on other people’s children, too. PDD is sharing with parents and their children one-on-one the lessons of the last 35 years and helping them apply those lessons to choosing higher education. The seven planks in our platform are:

  • Researching and monitoring Canada’s economy
  • Researching and monitoring the global economy
  • Researching and monitoring the labour market
  • Acquiring and analyzing deep market intelligence
  • Identifying and analyzing industry trends
  • Quantifying and projecting precarious employment
  • Business case preparation to support a Plan A and Plan B scenario

An article entitled ‘The New Debate Over The Very Rich’ appeared in the June 29, 1992, issue of FORTUNE. It said in part: “Between 1980 and 1990, FORTUNE 500 companies shed 3.4 million jobs, but companies with fewer than 500 employees created more than 13 million.”

The Canada-U.S. free trade agreement (FTA) came into force in 1989. My multinational IT executive search clients were already responding. The consequences figured in our family’s discussions about university.

Canada now has 12 free trade partners. That number will grow to 21 when current negotiations conclude. There will be concessions, compromises, headcount reductions, restructuring, outsourcing and offshoring as employers adjust to their new normal. Please see the Foreign Affairs, Trade and Development Canada website for further information.

2014 in review

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 5,000 times in 2014. If it were a NYC subway train, it would take about 4 trips to carry that many people.

Click here to see the complete report.